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Table of Contents
As filed with the Securities and Exchange Commission on November 7, 2023
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2023
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to__________                            
Commission File No. 001-40420
https://cdn.kscope.io/48f79a9f0f16d9b71872ccee51cfc1d3-Vimeo Logo_RegistrationBlack.jpg
VIMEO, INC.
(Exact name of registrant as specified in its charter)
Delaware85-4334195
 (State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
330 West 34th Street, 5th Floor New York, New York 10001
(Address of registrant's principal executive offices)
(212524-8791
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Exchange on Which Registered
Common Stock, par value $0.01 per shareVMEO
The Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
As of November 2, 2023, the following shares of the registrant's common stock were outstanding:
Common Stock158,219,615 
Class B common stock9,399,250 
Total167,618,865 



TABLE OF CONTENTS
  Page
Number



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "may, "could," "should," "would," "anticipates," "estimates," "expects," "plans," "projects," "forecasts," "intends," "targets," "seeks" and "believes," as well as variations of these words, among others, generally identify forward-looking statements. These forward-looking statements include, among others, statements relating to Vimeo's future results of operations and financial condition, business strategy, and plans and objectives of management for future operations.
Forward-looking statements are based on our management's beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions. Actual results could differ materially from those contained in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to:
we have a history of losses,
our prior rapid growth may not be indicative of future performance,
our limited operating history as a pure software-as-a-service ("SaaS") company and our limited history of selling such plans on a sales-assisted basis,
our total addressable market may prove to be smaller than we expect,
our ability to read data and make forecasts may be limited,
we may not have the right product/market fit,
we may not be able to attract free users or paid subscribers,
we may not be able to convert our free users into paid subscribers,
competition in our market is intense,
we may not be able to scale our business effectively,
we may need additional funding as we continue to grow our business,
we may experience service interruptions,
hosting and delivery costs may increase unexpectedly,
weakened global economic conditions may harm our industry, business and results of operations,
our business involves hosting large quantities of user content,
we have been sued for hosting content that allegedly infringed on a third-party copyright,
we may face liability for hosting a variety of tortious or unlawful materials,
we have faced negative publicity for removing, or declining to remove, certain content, regardless of whether such content violated any law,
we collect, store and process large amounts of content and personal information and any loss of or unauthorized access to such data could materially impact our business,
the continuing effects of the COVID-19 pandemic are highly unpredictable and could be significant, and the duration and extent to which this will impact our future results of operations and overall financial performance remains uncertain,
our success depends, in part, on the integrity of our information technology systems and infrastructures,
we have been the target of cyberattacks by malicious actors, and
the risks described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.
Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.




You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. Any forward-looking statements only speak as of the date of this document, and we undertake no obligation to update any forward-looking information or statements, whether written or oral, to reflect any change, except as required by law. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified by these cautionary statements.


Table of Contents

PART I
FINANCIAL INFORMATION
Item 1.    Consolidated Financial Statements
VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 2023December 31, 2022
(In thousands, except par value amounts)
ASSETS  
Cash and cash equivalents$290,564 $274,497 
Accounts receivable, net25,182 31,434 
Prepaid expenses and other current assets20,613 18,395 
Total current assets336,359 324,326 
Leasehold improvements and equipment, net854 1,355 
Goodwill245,406 245,406 
Intangible assets with definite lives, net2,977 5,468 
Other non-current assets24,082 28,876 
TOTAL ASSETS$609,678 $605,431 
LIABILITIES AND SHAREHOLDERS' EQUITY  
LIABILITIES:  
Accounts payable, trade$7,329 $8,415 
Deferred revenue169,857 167,388 
Accrued expenses and other current liabilities50,812 57,151 
Total current liabilities227,998 232,954 
Other long-term liabilities14,960 18,619 
Commitments and contingencies
SHAREHOLDERS' EQUITY: 
Common stock, $0.01 par value; 1,600,000 shares authorized; 157,928 and 157,187 shares issued and outstanding, respectively
1,579 1,572 
Class B common stock, $0.01 par value; 400,000 shares authorized; 9,399 shares issued and outstanding
94 94 
Preferred stock, $0.01 par value; 100,000 shares authorized; no shares issued and outstanding
  
Additional paid-in capital768,033 768,390 
Accumulated deficit(401,730)(415,367)
Accumulated other comprehensive loss(1,256)(831)
Total shareholders' equity366,720 353,858 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$609,678 $605,431 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
5

Table of Contents

VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands, except per share data)
Revenue$106,253 $108,133 $311,670 $327,464 
Cost of revenue (exclusive of depreciation shown separately below)21,802 25,247 68,319 78,881 
Gross profit84,451 82,886 243,351 248,583 
Operating expenses:
Research and development expense23,153 34,378 81,089 104,524 
Sales and marketing expense36,704 43,554 116,455 129,790 
General and administrative expense18,396 26,461 34,645 84,783 
Depreciation 168 141 1,198 2,054 
Amortization of intangibles347 1,234 2,491 3,866 
Total operating expenses78,768 105,768 235,878 325,017 
Operating income (loss)5,683 (22,882)7,473 (76,434)
Interest expense  (124)(998)(367)
Other income, net3,657 2,199 9,235 3,712 
Earnings (loss) before income taxes9,340 (20,807)15,710 (73,089)
Income tax provision(876)(609)(2,073)(1,387)
Net earnings (loss)$8,464 $(21,416)$13,637 $(74,476)
Per share information:
Basic earnings (loss) per share$0.05 $(0.13)$0.08 $(0.46)
Diluted earnings (loss) per share$0.05 $(0.13)$0.08 $(0.46)
Stock-based compensation expense by function:  
Cost of revenue$271 $297 $740 $698 
Research and development expense2,149 7,908 11,650 19,329 
Sales and marketing expense1,723 2,977 7,376 6,352 
General and administrative expense2,979 8,212 (14,337)25,880 
Total stock-based compensation expense$7,122 $19,394 $5,429 $52,259 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE OPERATIONS
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands)
Net earnings (loss)$8,464 $(21,416)$13,637 $(74,476)
Other comprehensive loss:
Change in foreign currency translation adjustment(675)(566)(425)(1,118)
Total other comprehensive loss(675)(566)(425)(1,118)
Comprehensive income (loss)$7,789 $(21,982)$13,212 $(75,594)


The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three and Nine Months Ended September 30, 2023 and 2022
(Unaudited)
 
Common stock, $0.01 par value
Class B common stock, $0.01 par value
Additional
Paid-in Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Total
Shareholders' Equity
 $Shares$Shares
 (In thousands)
Balance at June 30, 2023$1,574 157,439 $94 9,399 $762,000 $(410,194)$(581)$352,893 
Net earnings— — — — — 8,464 — 8,464 
Other comprehensive loss— — — — — — (675)(675)
Stock-based compensation expense— — — — 7,122 — — 7,122 
Amounts related to settlement of equity awards5 489 — — (1,089)— — (1,084)
Balance at September 30, 2023$1,579 157,928 $94 9,399 $768,033 $(401,730)$(1,256)$366,720 
Balance at December 31, 2022$1,572 157,187 $94 9,399 $768,390 $(415,367)$(831)$353,858 
Net earnings— — — — — 13,637 — 13,637 
Other comprehensive loss— — — — — — (425)(425)
Stock-based compensation expense— — — — 5,429 — — 5,429 
Amounts related to settlement of equity awards23 2,365 — — (5,802)— — (5,779)
Restricted Stock Award(16)(1,624)— — 16 — —  
Balance at September 30, 2023$1,579 157,928 $94 9,399 $768,033 $(401,730)$(1,256)$366,720 

 
Common stock, $0.01 par value
Class B common stock, $0.01 par value
Additional
Paid-in Capital
Accumulated DeficitAccumulated
Other
Comprehensive
Loss
Total
Shareholders' Equity
 $Shares$Shares
 (In thousands)
Balance at June 30, 2022$1,570 $156,977 $94 $9,399 $737,239 $(388,836)$(638)$349,429 
Net loss— — — — — (21,416)— (21,416)
Other comprehensive loss— — — — — — (566)(566)
Stock-based compensation expense— — — — 19,394 — — 19,394 
Amounts related to settlement of equity awards— 47 — — (2)— — (2)
Balance at September 30, 2022$1,570 157,024 $94 9,399 $756,631 $(410,252)$(1,204)$346,839 
Balance at December 31, 2021$1,567 $156,708 $94 $9,399 $704,796 $(335,776)$(86)$370,595 
Net loss— — — — — (74,476)— (74,476)
Other comprehensive loss— — — — — — (1,118)(1,118)
Stock-based compensation expense— — — — 52,259 — — 52,259 
Amounts related to settlement of equity awards3 316 — — (424)— — (421)
Balance at September 30, 2022$1,570 157,024 $94 9,399 $756,631 $(410,252)$(1,204)$346,839 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
 20232022
 (In thousands)
Cash flows from operating activities:  
Net earnings (loss)$13,637 $(74,476)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: 
Stock-based compensation expense5,429 52,259 
Amortization of intangibles2,491 3,866 
Depreciation1,198 2,054 
Provision for credit losses326 7,750 
Loss on the sale of an asset37  
Non-cash lease expense3,410 4,646 
Other adjustments, net1,053 (719)
Changes in assets and liabilities:
Accounts receivable3,453 (11,916)
Prepaid expenses and other assets(1,987)(1,556)
Accounts payable and other liabilities(6,210)(19,179)
Deferred revenue4,966 (1,485)
Net cash provided by (used in) operating activities27,803 (38,756)
Cash flows from investing activities:
Acquisitions, net of cash acquired 21 
Capital expenditures(108)(670)
Proceeds from the sale of an asset639 1,611 
Net cash provided by investing activities531 962 
Cash flows from financing activities:
Withholding taxes paid related to equity awards(5,697)(5,160)
Proceeds from exercise of stock options134 18 
Contingent consideration payment(5,774)(4,816)
Other(266)(621)
Net cash used in financing activities(11,603)(10,579)
Total cash provided (used)16,731 (48,373)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(674)(765)
Net increase (decrease) in cash and cash equivalents and restricted cash16,057 (49,138)
Cash and cash equivalents and restricted cash at beginning of period274,834 322,345 
Cash and cash equivalents and restricted cash at end of period$290,891 $273,207 

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION
Description of Business
Vimeo is the world's leading all-in-one video software solution, providing the full breadth of video tools through a software-as-a-service model. Vimeo's comprehensive and cloud-based tools empower its users to create, collaborate and communicate with video on a single, turnkey platform.
As used herein, "Vimeo," "we," "our" or "us" and similar terms in these consolidated financial statements refer to Vimeo, Inc. and its subsidiaries (unless the context requires otherwise).
Spin-off
On May 25, 2021, Vimeo completed its separation from IAC/InterActiveCorp ("IAC") through a series of transactions (which we refer to as the "Spin-off") that resulted in the pre-transaction stockholders of IAC directly owning shares in both IAC and Vimeo, and in Vimeo becoming a separately traded public company. For more information regarding the Spin-off, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Basis of Presentation and Consolidation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and with the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and notes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments considered necessary for a fair presentation. Interim results are not necessarily indicative of the results that may be expected for the full year. The information included in this Form 10-Q should be read in conjunction with the annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
All intercompany transactions and balances between and among Vimeo and its subsidiaries have been eliminated. All related party transactions between Vimeo and IAC and its subsidiaries, other than amounts related to the settlement of equity awards are reflected in the accompanying consolidated statement of cash flows as operating activities. Amounts related to the settlement of equity awards are reflected in the accompanying consolidated statement of cash flows as financing activities.
All related party balances between Vimeo and IAC and its subsidiaries are reflected in the accompanying consolidated balance sheet within "Accrued expenses and other current liabilities" and "Other long-term liabilities".
Accounting Estimates
Management of Vimeo is required to make certain estimates, judgments and assumptions during the preparation of its consolidated financial statements in accordance with GAAP that affect the amounts reported in the accompanying consolidated financial statements and footnotes thereto. Actual results could differ from these estimates.

Significant estimates and judgments inherent in the preparation of the accompanying consolidated financial statements include those related to: the carrying value of accounts receivable, including the determination of the allowance for credit losses; the determination of the estimated customer relationship period for certain costs to obtain a contract with a customer; the carrying value of right-of-use assets ("ROU assets"); the useful lives and recoverability of intangible assets with definite lives; the recoverability of goodwill; contingencies; unrecognized tax benefits; the valuation allowance for deferred income tax assets; and the fair value of and forfeiture rates for stock-based awards, among others. Vimeo bases its estimates, judgments and assumptions on historical experience, its forecasts and budgets and other factors that Vimeo considers relevant.
Recent Accounting Pronouncements
There are no recently issued accounting pronouncements that have not yet been adopted that are expected to have a material effect on the consolidated results of operations, financial condition or cash flows of Vimeo.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
NOTE 2—REVENUE

Revenue Recognition
Vimeo's revenue is derived primarily from SaaS subscription fees paid by customers. Revenue, in the amount that reflects the consideration Vimeo expects to be entitled to, is recognized on a straight-line basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. Subscription periods generally range from one month to three years with the most common being an annual subscription and are generally non-cancellable.
Disaggregated revenue is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Revenue:
Self-Serve & Add-Ons$71,935 $76,737 $214,358 $231,074 
Vimeo Enterprise15,220 9,960 39,691 28,856 
Other19,098 21,436 57,621 67,534 
Total$106,253 $108,133 $311,670 $327,464 

Revenue by geography is based on where the customer is located. The United States was the only country whose revenue constituted greater than 10% of total revenue of the Company for the three and nine months ended September 30, 2023 and 2022.
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Revenue:
United States$57,272 $55,586 $166,171 $165,467 
All other countries48,981 52,547 145,499 161,997 
Total$106,253 $108,133 $311,670 $327,464 

Deferred Revenue
Deferred revenue consists of payments that are received or are contractually due in advance of Vimeo's performance. Vimeo's deferred revenue is reported on a contract by contract basis at the end of each reporting period. Vimeo classifies deferred revenue as current when the term of the applicable subscription period or expected completion of its performance obligation is one year or less. The current and non-current deferred revenue balances are included in the accompanying consolidated balance sheet as follows:
September 30,
2023
December 31,
2022
(In thousands)
Deferred revenue$169,857 $167,388 
Other long-term liabilities1,311 1,286 
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
During the nine months ended September 30, 2023, Vimeo recognized $155.2 million of revenue that was included in the deferred revenue balance at December 31, 2022. During the nine months ended September 30, 2022, Vimeo recognized $166.0 million of revenue that was included in the deferred revenue balance at December 31, 2021.
Practical Expedients and Exemptions
Vimeo does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which Vimeo recognizes revenue at the amount which Vimeo has the right to invoice for services performed.
Assets Recognized from the Costs to Obtain a Contract with a Customer
Vimeo has determined that certain costs, primarily commissions paid to employees pursuant to certain sales incentive programs and mobile app store fees, meet the requirements to be capitalized as a cost of obtaining a contract. Commissions paid to employees pursuant to certain sales incentive programs are amortized over the estimated customer relationship period. Vimeo calculates the estimated customer relationship period as the average customer life, which is based on historical data. When customer renewals are expected and the renewal commission is not commensurate with the initial commission, the average customer life includes renewal periods. For sales incentive programs where the customer relationship period is one year or less, Vimeo has elected the practical expedient to expense the costs as incurred. Vimeo capitalizes and amortizes mobile app store fees over the term of the applicable subscription.
The current and non-current balances of capitalized costs to obtain a contract with a customer are included in the accompanying consolidated balance sheet as follows:
September 30,
2023
December 31,
2022
(In thousands)
Prepaid expenses and other current assets$4,921 $4,168 
Other non-current assets8,163 7,988 
NOTE 3—INCOME TAXES
At the end of each interim period, Vimeo estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss with discrete items recorded in the period. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained, or Vimeo's tax environment changes.
For the three months ended September 30, 2023 and 2022, Vimeo recorded an income tax provision of $0.9 million and $0.6 million, respectively. For the nine months ended September 30, 2023 and 2022, Vimeo recorded an income tax provision of $2.1 million and $1.4 million, respectively. Vimeo's largest deferred tax assets are tax attribute carryforwards as well as capitalized research and development expenses. Vimeo has recorded a valuation allowance for the majority of its net deferred tax assets because it has concluded that it is more likely than not that the tax benefit will not be realized.

At September 30, 2023 and December 31, 2022, unrecognized tax benefits were $3.5 million and $2.5 million, respectively. If unrecognized tax benefits at September 30, 2023 are subsequently recognized, there would be no impact to income tax provision due to the valuation allowance on deferred tax assets. Vimeo believes no unrecognized tax benefits would decrease by September 30, 2024. Vimeo recognizes interest and penalties related to unrecognized tax benefits, if applicable, in income tax provision. There are currently no accruals for interest or penalties.


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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 4—FAIR VALUE MEASUREMENTS
Vimeo's financial instruments that are measured at fair value on a recurring basis are as follows:
 September 30, 2023
 Quoted Market
Prices for
Identical Assets in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
 (In thousands)
Assets:    
Money market funds$262,701 $ $ $262,701 
Time deposits 1,684  1,684 
Total$262,701 $1,684 $ $264,385 
Liabilities:
Contingent consideration arrangements$ $ $ $ 

 December 31, 2022
 Quoted Market
Prices for
Identical Assets in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Fair Value
Measurements
 (In thousands)
Assets:    
Money market funds$249,422 $ $ $249,422 
Time deposits 847  847 
Total$249,422 $847 $ $250,269 
Liabilities:
Contingent consideration arrangements$ $ $7,845 $7,845 

Money market funds and time deposits are included in "Cash and cash equivalents" in the accompanying consolidated balance sheet. Contingent consideration is included in "Accrued expenses and other current liabilities" in the accompanying consolidated balance sheet.
Vimeo's non-financial assets, such as goodwill, intangible assets with definite lives, ROU assets and leasehold improvements and equipment, are adjusted to fair value only if an impairment is recognized. Such fair value measurements are based predominantly on Level 3 inputs.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)

The changes in the Company's financial instruments that are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Balance at beginning of period$2,977 $13,108 $7,845 $12,200 
Total net (gains) losses:
Included in operating income (loss)(500)15 (396)(654)
Measurement period adjustments   1,577 
Settlements(2,477)(4,816)(7,449)(4,816)
Balance at end of period$ $8,307 $ $8,307 

Contingent Consideration Arrangements

The contingent consideration arrangement for Wibbitz Ltd. ("Wibbitz"), the acquisition of which the Company completed on November 10, 2021, was based upon the amount of annual recurring revenue ("ARR") from Wibbitz subscribers who were expected to migrate to the Vimeo platform. In the third quarter of 2023, the contingent consideration arrangement was finalized, which resulted in a payment of $2.5 million to Wibbitz's former shareholders, and a $0.5 million gain was recorded within "General and administrative expense" in the accompanying consolidated statement of operations. In the accompanying consolidated statement of cash flows, the final $2.5 million payment is included in "Contingent consideration payment" within financing activities.

The contingent consideration arrangement for WIREWAX Ltd. ("WIREWAX"), the acquisition of which the Company completed on December 6, 2021, was based upon achievement of an integration milestone and attainment of certain ARR thresholds within two years of the acquisition. In the first quarter of 2023, WIREWAX achieved the ARR threshold that resulted in a payment of $5.0 million to its former shareholders and a $0.1 million loss was recorded in the three months ended March 31, 2023, which was recorded within "General and administrative expense" in the accompanying consolidated statement of operations. In the accompanying consolidated statement of cash flows, the final $5.0 million payment is included in "Contingent consideration payment" within financing activities and "Accounts payable and other liabilities" within operating activities for $3.3 million and $1.7 million, respectively. Additionally, the integration milestone was met in the third quarter of 2022, resulting in a payment of $4.8 million, which was consistent with the fair value estimated as of the acquisition date and is included in "Contingent consideration payment" within financing activities in the accompanying consolidated statement of cash flows.

NOTE 5—REVOLVING CREDIT FACILITY
Effective June 30, 2023, Vimeo.com, Inc. terminated the $100 million revolving credit facility (the "Credit Facility") set to expire February 12, 2026, under, and in accordance with the terms of, that certain credit agreement, dated as of February 12, 2021, among Vimeo.com, Inc., as borrower, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent. In connection with such termination, a letter of credit issued under the Credit Facility was cash collateralized, all other outstanding obligations were paid off in full and all liens securing the Credit Facility were released.

NOTE 6—SHAREHOLDERS' EQUITY
Description of Vimeo Common Stock and Vimeo Class B Common Stock
Except as described herein, shares of Vimeo common stock and Vimeo Class B common stock are identical.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
In general, the holders of Vimeo common stock vote together as a single class with the holders of Vimeo Class B common stock on all matters, including the election of directors; provided, however, that the holders of Vimeo common stock, acting as a single class, are entitled to elect twenty-five percent (25%) of the total number of Vimeo directors, rounded up to the next whole number in the event of a fraction. Each outstanding share of Vimeo common stock and Vimeo Class B common stock entitles the holder to one vote per share and ten votes per share, respectively.
The holders of shares of Vimeo common stock and the holders of shares of Vimeo Class B common stock are entitled to receive, share for share, such dividends as may be declared by Vimeo's Board of Directors (the "Board") out of funds legally available for the payment of dividends. In the event of a liquidation, dissolution, distribution of assets or winding-up of Vimeo, the holders of shares of Vimeo common stock and Vimeo Class B common stock are entitled to receive, share for share, all the assets available for distribution after payment of a proper amount to the holders of any series of Vimeo preferred stock, including any series that may be issued in the future.
Upon completion of the Spin-off, Vimeo amended and restated its certificate of incorporation such that it is authorized to issue 1,600,000,000 shares of Vimeo common stock and 400,000,000 shares of Vimeo Class B common stock.
Description of Preferred Stock
The Board is authorized to provide for the issuance of shares of preferred stock, and any class or series thereof, and to assign the designations, powers, preferences and rights to each such class or series and any qualifications, limitations or restrictions. There have been no preferred stock issuances to date.
Stock Repurchase Program
On February 25, 2022, the Board authorized a stock repurchase program of up to $50 million of the Company’s common stock through open market or private transactions. Under the stock repurchase authorization, Vimeo may repurchase shares of its common stock at any time or from time to time, without prior notice, subject to market conditions and other considerations, as determined by management. Vimeo's repurchases may be made through 10b5-1 plans, open market purchases, privately negotiated transactions, block purchases or other transactions. No date has been established for the completion of the stock repurchase program. Vimeo intends to fund repurchases under the repurchase program from cash on hand. Vimeo has no obligation to repurchase any shares under the repurchase program and may suspend or discontinue it at any time. There were no shares repurchased during the nine months ended September 30, 2023.
NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss consisting of foreign currency translation adjustments is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)
Balance at beginning of period$(581)$(638)$(831)$(86)
Other comprehensive loss(675)(566)(425)(1,118)
Balance at end of period$(1,256)$(1,204)$(1,256)$(1,204)
At both September 30, 2023 and 2022, there was no tax benefit or provision on accumulated other comprehensive loss.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 8—STOCK-BASED COMPENSATION
Vimeo Restricted Shares
On March 23, 2023, the Company announced in a Current Report on Form 8-K filed with the SEC that Joseph Levin, Chairman and member of the Board and IAC's Chief Executive Officer, submitted his resignation as Chairman and member of the Board, effective immediately. Mr. Levin’s resignation was not the result of any dispute or disagreement with the Company or the Board. Mr. Levin now serves as Special Advisor to the Board.
In connection with Mr. Levin's resignation, the Company entered into an amended and restated Restricted Stock Agreement, dated as of March 20, 2023 (the "Amended RSA") to the Restricted Stock Agreement, dated as of June 7, 2021, by and between the Company and Mr. Levin (the "RSA"). Pursuant to the Amended RSA, the RSA will continue in connection with Mr. Levin's service as Special Advisor to the Board. In consideration of Mr. Levin's reduced services as Special Advisor in comparison to his services previously provided as Chairman and Board member, the Amended RSA reduces the total number of shares of Vimeo common stock underlying the RSA by one-third, to a total of 3,247,000 shares ("Vimeo Restricted Shares"), that cliff vest on November 5, 2030 based on satisfaction of certain Vimeo stock price targets and Mr. Levin's continuous service as a Special Advisor through the vesting date.
Mr. Levin may elect to accelerate vesting of the Vimeo Restricted Shares, effective on November 5, 2026 and each year thereafter through November 5, 2029, in which case performance will be measured through such date, and Mr. Levin will receive a pro-rated portion of the award and any remaining shares will be forfeited. The applicable stock price goals are proportionately lower on the earlier vesting dates.
The Company accounted for these changes as a modification of the Vimeo Restricted Shares because the service condition of the RSA was not met due to Mr. Levin's resignation as Chairman of the Board, but the RSA will continue in connection with Mr. Levin's reduced services as Special Advisor. Accordingly, in the three months ended March 31, 2023, the Company reversed $14.8 million of stock-based compensation expense which represents the cumulative amount of such stock-based compensation expense recognized in "General and administrative expense" in the accompanying consolidated statement of operations since entering into the RSA with Mr. Levin. The fair value of the Vimeo Restricted Shares underlying the Amended RSA on the modification date was $2.3 million and is expected to be recognized over the remaining requisite service period through November 5, 2030, subject to Mr. Levin's continued service as Special Advisor. The fair value of the Vimeo Restricted Shares was determined using a lattice model that incorporated a Monte Carlo simulation of Vimeo's stock price as this award contains a market condition.
CEO Market-Based Award
On March 21, 2023, the Company and Anjali Sud, Vimeo's CEO, entered into an Amended and Restated Restricted Stock Unit Award Agreement (the "Amended RSU Agreement"), which amended and restated the existing Restricted Stock Unit Award Agreement between the Company and Ms. Sud dated March 25, 2022 (the "Original Award Agreement") to revise the vesting schedule and stock performance targets of the Original Award Agreement. The Company accounted for these changes as a modification, which was originally expected to result in incremental stock-based compensation expense of $2.2 million. On July 5, 2023, the Company announced in a Current Report on Form 8-K filed with the SEC that Ms. Sud notified the Company on June 30, 2023 of her intention to step down from her role as CEO effective as of August 31, 2023, and as a result, this award was forfeited upon Ms. Sud's departure.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 9—EARNINGS (LOSS) PER SHARE
Vimeo common stock and Class B common stock are treated as one class of common stock for earnings per share ("EPS") purposes as both classes of common stock participate in earnings, dividends and other distributions on the same basis. Vimeo calculates basic EPS using the two-class method since the Vimeo Restricted Shares are participating securities as they are unvested and have a non-forfeitable dividend right in the event the Company declares a cash dividend to common shareholders and participates in all other distributions of the Company in the same manner as all other Vimeo common shareholders. Diluted EPS is calculated, on the most dilutive basis, which excludes equity awards that would be anti-dilutive.
The computation of basic and diluted earnings (loss) per share attributable to common shareholders is as follows:

 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands, except per share data)
Basic EPS:
Numerator:
Net earnings (loss)$8,464 $(21,416)$13,637 $(74,476)
Less: Net earnings attributed to participating security(164) (304) 
Net earnings (loss) attributable to common stock shareholders$8,300 $(21,416)$13,333 $(74,476)
Denominator: (a)
Weighted average basic common shares outstanding163,877 161,529 162,822 161,433 
Earnings (loss) per share attributable to common stock shareholders:
Earnings (loss) per share$0.05 $(0.13)$0.08 $(0.46)
Diluted EPS:
Numerator:
Net earnings (loss)$8,464 $(21,416)$13,637 $(74,476)
Less: Net earnings attributed to participating security(162) (301) 
Net earnings (loss) attributable to common stock shareholders$8,302 $(21,416)$13,336 $(74,476)
Denominator: (a)
Weighted average basic common shares outstanding163,877 161,529 162,822 161,433 
Dilutive securities2,029  2,098  
Weighted average diluted common shares outstanding165,906 161,529 164,920 161,433 
Antidilutive securities20,059 35,055 22,674 35,055 
Earnings (loss) per share attributable to common stock shareholders:
Earnings (loss) per share$0.05 $(0.13)$0.08 $(0.46)
_____________________
(a)    Vimeo Restricted Shares were included in shares of common stock issued and outstanding at September 30, 2023 and December 31, 2022 in the accompanying consolidated balance sheet, but were excluded from the computation of average basic common shares outstanding for EPS purposes because the number of shares that ultimately vest is subject to the satisfaction of certain market-based conditions.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 10—FINANCIAL STATEMENT DETAILS
Cash and Cash Equivalents and Restricted Cash
The reconciliation of cash and cash equivalents and restricted cash reported within the accompanying consolidated balance sheet to the total amounts shown in the accompanying consolidated statement of cash flows is as follows:
September 30, 2023December 31, 2022September 30, 2022December 31, 2021
(In thousands)
Cash and cash equivalents$290,564 $274,497 $272,870 $321,900 
Restricted cash included in Prepaid expenses and other current assets327 337 337 445 
Total cash and cash equivalents and restricted cash as shown in the accompanying consolidated statement of cash flows$290,891 $274,834 $273,207 $322,345 
Restricted cash primarily consisted of deposits related to a lease and corporate credit cards.
Credit Losses
The changes in the allowance for credit losses are as follows:
Nine Months Ended September 30,
20232022
(In thousands)
Balance at beginning of period$5,183 $1,324 
Provision for credit losses326 7,750 
Write-offs charged against the allowance(3,683)(4,726)
Recoveries collected800 757 
Currency translation adjustment5 (11)
Balance at end of period$2,631 $5,094 
Accumulated Amortization and Depreciation
Accumulated amortization and depreciation within the accompanying consolidated balance sheet are as follows:
Asset CategorySeptember 30, 2023December 31, 2022
 (In thousands)
ROU assets included in Other non-current assets$13,497 $10,087 
Leasehold improvements and equipment$1,305 $784 
Intangible assets with definite lives$47,283 $44,792 

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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Other income, net
The components of "Other income, net" are as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands)
Foreign exchange gains, net$308 $961 $245 $2,016 
Interest income3,349 1,238 9,027 1,696 
Loss on sale of an asset  (37) 
Other income, net$3,657 $2,199 $9,235 $3,712 

Geographic Concentrations
Long-lived assets, excluding goodwill, intangible assets with definite lives and ROU assets, at September 30, 2023 and December 31, 2022 relate to "Leasehold improvements and equipment, net."
September 30,
2023
December 31,
2022
(In thousands)
Leasehold improvements and equipment, net:
United States$524 $537 
All other countries330 818 
Total$854 $1,355 
NOTE 11—CONTINGENCIES
In the ordinary course of business, Vimeo is, and from time to time may become, a party to various legal proceedings. Vimeo establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain other legal matters where it believes an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that resolving claims against Vimeo, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations or financial condition of Vimeo, these matters are subject to inherent uncertainties and management's view of these matters may change in the future. Vimeo also evaluates other contingent matters, including income and non-income tax contingencies, to assess the likelihood of an unfavorable outcome and estimated extent of potential loss. It is possible that an unfavorable outcome of one or more of these lawsuits or other contingencies could have a material impact on the liquidity, results of operations or financial condition of Vimeo. See "Note 3—Income Taxes" for additional information related to income tax contingencies.

EMI/Capitol Records Copyright Infringement Litigation
In December 2009, a group of music publishers owned by EMI Music Publishing (now owned by Sony/ATV Music Publishing, a subsidiary of Sony Entertainment) and a group of then EMI-affiliated record companies, including Capitol Records (now owned by Universal Music Group), filed two lawsuits against Vimeo and its former owner, Connected Ventures, in the U.S. District Court for the Southern District of New York. See Capitol Records, LLC v. Vimeo, LLC, No. 09 Civ. 10101 (S.D.N.Y.) and EMI Blackwood Music, Inc. v. Vimeo, LLC, No. 09 Civ. 10105 (S.D.N.Y.). In both cases, plaintiffs allege that Vimeo infringed their music copyrights (in the publishers' musical compositions and the record companies' sound recordings) by hosting and streaming videos uploaded by users (and in certain cases, former employees) featuring their musical works. Plaintiffs seek, among other things, injunctive relief and monetary damages. The initial complaints identified 199 videos as infringing (which Vimeo removed post-suit).
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Prior to suit, plaintiffs did not avail themselves of their right to submit a takedown notice to Vimeo pursuant to the online safe harbor provisions of the Digital Millennium Copyright Act of 1998 ("DMCA"), which limits the liability of online service providers for copyright infringement of their users when the provider takes certain measures. Vimeo asserts that the DMCA limits its liability because it complies with the DMCA and plaintiffs failed to submit takedown notices. Plaintiffs disagree, asserting various theories as to why the DMCA may not apply to some or all of the videos-in-suit.
The district court bifurcated proceedings and required the parties to first litigate the issue of whether Vimeo satisfied the DMCA's safe harbor provisions. On September 18, 2013, the district court granted partial summary judgment to Vimeo on 144 of the 199 original videos-in-suit on the ground that Vimeo complied with the threshold requirements of the DMCA and that there was no evidence that a Vimeo employee had watched the videos in question such that Vimeo had actual or "red flag" knowledge of infringement, which would disqualify the DMCA's application. The court denied summary judgment as to 35 videos-in-suit on the ground that there was a material question of fact as to whether Vimeo had "red flag" knowledge of infringement based upon employees having watched all or part of these videos. The court further held that the DMCA did not apply to the record companies' state-law claims regarding sound recordings fixed before February 1972; a trial was necessary to determine whether Vimeo was liable for employees who uploaded approximately 20 videos; and that plaintiffs should be permitted to amend their complaints to add over 1,500 videos allegedly infringing their copyrights (which Vimeo removed after receiving plaintiffs' proposed amended complaint).
Vimeo sought and obtained the right to appeal certain issues on an interlocutory basis to the U.S. Court of Appeals for the Second Circuit. On June 16, 2016, the Second Circuit held that (1) the district court had applied the incorrect summary-judgment standard for "red flag" infringement and that evidence that an employee watched all or part of a video containing plaintiffs' music did not raise a genuine issue of fact as to whether Vimeo had "red flag" knowledge in such video; (2) the DMCA applies to state-law copyright infringement claims predicated on pre-1972 sound recordings; and (3) on an issue raised by plaintiffs in their cross-appeal, the record did not show that Vimeo was willfully blind towards infringing activity taking place on its platform. As a result of these rulings, the Second Circuit partially vacated the district court's ruling and remanded the case for further proceedings consistent with its judgment.
On March 31, 2018, the district court granted Vimeo’s motion to dismiss plaintiffs' state-law unfair competition claims on the grounds that they were state-law copyright claims covered by the DMCA per the Second Circuit's judgment. On May 28, 2021, the district court granted Vimeo summary judgment as to videos for which the sole remaining basis of liability was the assertion that Vimeo had "red flag" knowledge of infringement. On August 26, 2021, the district court approved a stipulation whereby plaintiffs agreed to conditionally dismiss all remaining claims to allow a final judgment to issue. Under the stipulation, plaintiffs may refile their claims regarding the alleged employee-uploaded videos if the Second Circuit reverses the district court's other rulings in whole or in part. On November 1, 2021, the district court entered a final judgment adopting the terms of the parties' stipulation. On November 29, 2021, plaintiffs filed an appeal to the U.S. Court of Appeals for the Second Circuit. The appeal has been fully briefed and argued.
Vimeo believes that the allegations in these lawsuits are without merit and will defend vigorously against them.

RTI Copyright Litigation
Between 2012 and 2017, Italian broadcaster Reti Televisive Italiane s.p.a. and an affiliate thereof (collectively, "RTI") filed four lawsuits for copyright infringement against Vimeo in the Civil Court of Rome. See Reti Televisive Italiane s.p.a. v. Vimeo, LLC, Cause Nos. 23732/12, 62343/2015, and 59780/2017 (Rome Civil Court), and Medusa Film v. Vimeo, Inc., Cause No. 74775/2017 (Rome Civil Court). In each case, RTI asserts that Vimeo infringed its copyrights by hosting and streaming user-uploaded videos that allegedly contain RTI's television or film programming, and seeks, among other things, injunctive relief and monetary damages.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
On January 15, 2019, the Civil Court of Rome concluded the first case (No. 23732/12) and entered a judgment against Vimeo, awarding RTI damages of €8,500,000 plus interest and entering an injunction against Vimeo with respect to further acts of infringement. Vimeo filed an appeal and petitioned to stay the judgment pending appeal. On May 13, 2019, the Rome Court of Appeals stayed the judgment pending appeal. On August 10, 2022, the Rome Court of Appeals affirmed the judgment. Vimeo is now appealing to the Italian Supreme Court of Cassation. On June 1, 2023 RTI filed an action in the Supreme Court of New York, New York County to enforce the Civil Court's judgment of €8,500,000 (No. 652646/2023). The case was removed to federal court and is now pending in the Southern District of New York. See Reti Televisive Italiane S.p.A. v. Vimeo.com, Inc, No. 23 Civ. 05488 (S.D.N.Y.).

On June 2, 2019, the Civil Court of Rome concluded the second case (No. 62343/2015) and entered a judgment against Vimeo, awarding RTI damages of €4,746,273 plus interest and entering an injunction against Vimeo as to further acts infringement. Vimeo filed an appeal and petitioned to stay the judgment pending appeal. The Rome Court of Appeals declined to stay the judgment. On October 26, 2020, RTI commenced a lawsuit against Vimeo in the U.S. District Court for the Southern District of New York to enforce the damages award of the June 2019 judgment. See Reti Televisive Italiane s.p.a. v. Vimeo, LLC, No. 20 Civ. 8954 (S.D.N.Y.). On December 22, 2020, Vimeo and RTI filed, and the district court entered, a stipulation and order staying the U.S. proceedings pending the final outcome of the appeals from the Italian judgment at issue. On October 12, 2023, the Rome Court of Appeals published its decision affirming the lower court's judgment on liability but reducing the amount of damages to €3,865,161 plus interests and costs. On October 20, 2023, the U.S. District Court for the Southern District of New York entered an order lifting the stay of the U.S. enforcement proceedings (No. 20 Civ. 8954) and consolidating the two enforcement proceedings (No. 20 Civ. 8954 and No. 23 Civ. 05488). Vimeo has until November 10, 2023 to file a motion to stay or dismiss the cases.

On April 7, 2023, the Civil Court of Rome published a decision finding in favor of Vimeo and dismissing the third case (No. 59780/2017) in its entirety. On October 9, 2023, RTI served Vimeo with its appeal challenging the court's decision in the third case.

On October 18, 2022, the Civil Court of Rome issued a decision in the fourth case, Medusa Film v. Vimeo, Inc. (No. 74775/2017) finding liability but rejecting RTI's damage calculation and reserving judgment as to the amount of damages. On November 30, 2022, RTI served a notice of appeal challenging the court's decision on damages.

Vimeo believes that the allegations in these lawsuits are without merit and will defend vigorously against them.
Sony/Universal/Warner Copyright Litigation
In March 2021, Sony Music Entertainment Italy (a subsidiary of Sony Music Entertainment Group), Warner Music Italia (a subsidiary of Warner Music Group), Universal Music Italia (a subsidiary of Universal Music Group), and Warner Music International Services (a subsidiary of Warner Music Group) filed a lawsuit against Vimeo in the Court of Milan alleging violations of Italian copyright and unfair competition laws. See Sony Music Entertainment Italy s.p.a. et al. v. Vimeo, Inc., Case No. 10977/2021 (Court of Milan, Business Division). The complaint alleges that Vimeo infringed plaintiffs' copyrights by hosting and streaming user-uploaded videos that contain plaintiffs' copyrighted works and that, upon notification of the alleged infringement, Vimeo employed a takedown process that did not comply with Italian law. The complaint seeks, among other things, injunctive relief and damages to be quantified in a separate proceeding. Additionally, the complaint seeks potential penalties of €10,000 per day of delay in removing unauthorized works after receipt of a court order to do so, if applicable. On November 3, 2021, Vimeo filed its initial brief. On November 23, 2021, the parties attended the initial hearing with the Court of Milan where the court set forth a briefing schedule. The parties have exchanged briefs, and the next hearing is scheduled for December 19, 2023. Vimeo believes that the allegations in this lawsuit are without merit and will defend vigorously against them.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Illinois Biometric Information Privacy Act Litigation
On September 9, 2019, Bradley Acaley filed, on behalf of himself and other similarly situated individuals, a putative class action complaint against Vimeo in the Circuit Court of Cook County, Illinois. See Bradley Acaley v. Vimeo, Inc., Acaley v. Vimeo.com, Inc., Case No. 2019 CH10873 (Ill. Cir. Ct.). Vimeo thereafter removed the case to the U.S. District Court for the Northern District of Illinois, where it is now pending. See Bradley Acaley v. Vimeo, Inc., No. 19 Civ. 7164 (N.D. Ill.). In his complaint, plaintiff asserts that Vimeo's Magisto mobile application collected facial biometric information in a manner that violated his rights under the Illinois Biometric Information Privacy Act ("BIPA"), and he seeks, among other things, injunctive relief and monetary damages.

On May 29, 2022, the parties entered into a settlement agreement that, subject to court approval, will result in certain payments to class members in exchange for releases to Vimeo. On June 6, 2022, the case was, pursuant to the parties' stipulation, remanded from federal court back to the Circuit Court of Cook County, Illinois On July 22, 2022, plaintiffs' counsel filed a motion for preliminary approval of the settlement agreement, and the court issued an order granting preliminary approval of the $2.3 million settlement on January 20, 2023. On August 3, 2023, the court entered an order granting final approval of the settlement agreement and dismissing the case with prejudice and Vimeo paid the settlement amount during the third quarter of 2023.

Vimeo denies liability in connection with this lawsuit.
NOTE 12—RELATED PARTY TRANSACTIONS
Following the Spin-off, the relationship between Vimeo and IAC has been governed by a number of agreements that include: a separation agreement; a tax matters agreement; a transition services agreement; an employee matters agreement; and a data protection agreement. The total related charges for the three and nine months ended September 30, 2023 and 2022 were both $0.8 million, and $1.3 million and $3.6 million, respectively. During the three and nine months ended September 30, 2023 these charges included $0.8 million related to Vimeo's coverage prior to the Spin-off under IAC's membership with a patent risk management service, RPX Corporation. At September 30, 2023, Vimeo had a current payable due to IAC of $0.8 million, which was related to the RPX membership and included in "Accrued expenses and other current liabilities" in the accompanying consolidated balance sheet, and was subsequently paid in October 2023. At December 31, 2022, there was no amount due to IAC.
Upon the completion of the Spin-off, Vimeo entered into an operating lease agreement with IAC for the space Vimeo had previously occupied in IAC's headquarters building at 555 West 18th Street in New York City. Vimeo exited this space on June 30, 2022. Additionally in November 2021 Vimeo entered into a sublease agreement with a subsidiary of Angi Inc., which is also an indirect subsidiary of IAC, whereby Vimeo agreed to sublease the 10th floor at 330 West 34th Street ("West 34th Street Sublease") in New York City. In July 2022, Vimeo extended the terms of the West 34th Street Sublease, and added a sublease of a portion of the fifth floor, both through April 2028. At September 30, 2023 and December 31, 2022 Vimeo had a current lease liability of $2.3 million and $2.0 million included in "Accrued expenses and other current liabilities", respectively, and a non-current lease liability of $11.3 million and $13.0 million included in "Other long-term liabilities", respectively, related to the West 34th Street Sublease in the accompanying consolidated balance sheet. Rent expense for the three and nine months ended September 30, 2023 and 2022 were $0.9 million and $2.6 million, and $0.7 million and $3.7 million, respectively.
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VIMEO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 13—RESTRUCTURING
During the quarters ended March 31, 2023 and September 30, 2022, the Company completed evaluations to sufficient levels of detail to commit to restructuring plans that resulted in reductions to its workforce of approximately 11% and 6% of its employees, respectively. One-time termination benefits provided as part of the restructuring plans include severance, continuation of health insurance coverage and other benefits for a specified period of time, which resulted in $4.9 million of restructuring costs for the nine months ended September 30, 2023 and $4.2 million of restructuring costs for the three and nine months ended September 30, 2022.
Costs related to these restructuring plans have been recognized in the accompanying consolidated statement of operations as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (In thousands)
Restructuring costs:
Cost of revenue$ $ $298 $ 
Research and development expense 2,282 2,813 2,282 
Sales and marketing expense 1,133 1,078 1,133 
General and administrative expense 768 699 768 
Total$ $4,183 $4,888 $4,183 
As of September 30, 2023, all payments under the restructuring plans have been made.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations for Vimeo

GENERAL
Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Vimeo consolidated financial statements for the three and nine months ended September 30, 2023 included in "Item 1—Consolidated Financial Statements."
Operating Metrics and Key Terms:
Three Months Ended September 30,Nine Months Ended September 30,
20232022% Change20232022% Change
(In thousands, except ARPU)
Self-Serve & Add-Ons:
Subscribers1,397.3 1,539.1 (9)%1,397.3 1,539.1 (9)%
Average Subscribers1,414.7 1,552.5 (9)%1,451.2 1,546.9 (6)%
ARPU$202 $196 %$197 $200 (1)%
Bookings$67,409 $70,044 (4)%$213,572 $227,210 (6)%
Vimeo Enterprise:
Subscribers3.0 2.1 46 %3.0 2.1 46 %
Average Subscribers2.9 2.0 45 %2.6 1.8 43 %
ARPU$20,848 $19,847 %$20,154 $20,883 (3)%
Bookings$18,050 $11,639 55 %$49,786 $30,574 63 %
Other:
Subscribers71.0 102.0 (30)%71.0 102.0 (30)%
Average Subscribers74.3 108.4 (31)%82.2 120.4 (32)%
ARPU$1,019 $784 30 %$937 $750 25 %
Bookings$14,403 $14,527 (1)%$38,554 $49,044 (21)%
When the following terms appear in this Management's Discussion and Analysis of Financial Condition and Results of Operations for Vimeo, they have the meanings indicated below:
Self-Serve & Add-Ons relates to our subscription plans sold directly online, and any add-on services tied to those online subscriptions. This includes our Starter, Standard, and Advanced subscription plans, and add-on services such as bandwidth charges, which are sold through our sales force to subscribers of one of our plans if they exceed a certain threshold of bandwidth.
Vimeo Enterprise relates to our video offering designed for teams and organizations, which includes the same capabilities of Self-Serve & Add-Ons plus enterprise-grade features such as advanced security, custom user permissions, single-sign on for employees, interactive video tools, and marketing software integrations. Vimeo Enterprise is sold through our sales force and is often an upgrade from Vimeo's Self-Serve & Add-Ons as the number of users or use cases in an organization grows.
Other relates to products and services we offer outside of Self-Serve & Add-Ons and Vimeo Enterprise, primarily our over-the-top ("OTT") video monetization solution that allows customers to launch and run their own video streaming channel directly to their audience through a branded web portal, mobile apps and Internet-enabled TV apps. Other also includes Magisto, Livestream, WIREWAX, and Wibbitz.
Subscribers is the number of users who have an active subscription to one of Vimeo's paid plans measured at the end of the relevant period. Vimeo counts each account with a subscription plan as a subscriber. In the case of customers
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who maintain accounts across Self-Serve & Add-Ons, Vimeo Enterprise, and Other, Vimeo counts them as one subscriber for each of the components in which they maintain a subscription. Vimeo does not count team members who have access to a subscriber's account as additional subscribers.
Average Subscribers is the sum of the number of Subscribers at the beginning and at the end of the relevant measurement period divided by two.
Average Revenue per User ("ARPU") is the annualized revenue for the relevant period divided by Average Subscribers. For periods that are less than a full year, annualized revenue is calculated by dividing the revenue for that particular period by the number of calendar days in the period and multiplying this value by the number of days in that year.
Bookings consists of fixed fees for SaaS services, measured at the end of the relevant period, that subscribers have paid or committed to pay during their subscription period or 12 months, whichever is shorter, less refunds and chargebacks during the same period.
Gross Margin is revenue less cost of revenue, divided by revenue.
Cost of revenue consists primarily of hosting fees, credit card processing fees, compensation expense and other employee-related costs and stock-based compensation expense for personnel engaged in customer care functions, traffic acquisition costs, which includes the amortization of in-app purchase fees, outsourced customer care personnel costs, rent expense and facilities costs. In-app purchase fees are monies paid to Apple and Google in connection with the processing of in-app purchases of subscriptions and product features through the in-app payment systems provided by Apple and Google.
Research and development expense consists primarily of compensation expense and other employee-related costs and stock-based compensation expense that are not capitalized for personnel engaged in the design, development, testing and enhancement of product offerings and related technology, software license and maintenance costs, rent expense and facilities costs.
Sales and marketing expense consists primarily of advertising expenditures, which include online marketing, including fees paid to search engines, social media sites, e-mail campaigns, display advertising, video advertising and affiliate marketing, and offline marketing, which includes conferences and events, compensation expense and other employee-related costs and stock-based compensation expense for Vimeo's sales force and marketing personnel, software license and maintenance costs, rent expense and facilities costs.
General and administrative expense consists primarily of compensation expense and other employee-related costs and stock-based compensation expense for personnel engaged in executive management, finance, legal, tax, information technology and human resources, provision for credit losses, fees for professional services, rent expense, facilities costs, and software license and maintenance costs.
Vimeo Restricted Shares consist of 3,247,000 shares of Vimeo common stock underlying the Amended and Restated Restricted Stock Agreement entered into between the Company and Mr. Levin, Special Advisor to the Board and former Chairman of the Board, on March 20, 2023.
Credit Facility is the $100 million revolving credit facility entered into on February 12, 2021 by Vimeo.com, Inc., which was terminated in accordance with its terms effective June 30, 2023.
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") is a non-GAAP financial measure. See "Principles of Financial Reporting" for the definition of Adjusted EBITDA and a reconciliation of net earnings (loss) to Adjusted EBITDA, for the three and nine months ended September 30, 2023 and 2022.
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MANAGEMENT OVERVIEW
Vimeo is the world's leading all-in-one video software solution, providing the full breadth of video tools through a software-as-a-service model. Vimeo's comprehensive and cloud-based tools empower its users to create, collaborate and communicate with video on a single, turnkey platform.
Sources of Revenue
Vimeo's revenue is derived primarily from SaaS subscription fees paid by customers for subscription plans. Revenue is recognized on a straight-line basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer. Subscription periods generally range from one month to three years with the most common being an annual subscription and are generally non-cancellable.
Distribution, Marketing and Advertiser Relationships
Vimeo pays to market and distribute its services on third-party search engines and social media websites, and through e-mail campaigns, display advertising, video advertising and affiliate marketing. Vimeo also pays traffic acquisition costs, which consist of fees paid to Apple and Google related to the distribution and the facilitation of in-app purchases of product features. These distribution channels might also offer other third parties services and products, which compete with those Vimeo offers.
Vimeo also markets and offers its services and products through branded websites, allowing customers to transact directly with it in a convenient manner. Vimeo has made significant investments, and expects to scale investments, in online marketing to drive traffic to its websites.
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Results of Operations for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
Results of operations for the periods presented as a percentage of our revenue are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (as a % of revenue)
Revenue100 %100 %100 %100 %
Cost of revenue (exclusive of depreciation shown separately below)21 23 22 24 
Gross profit79 77 78 76 
Operating expenses:
Research and development expense22 32 26 32 
Sales and marketing expense35 40 37 40 
General and administrative expense17 24 11 26 
Depreciation — — — 
Amortization of intangibles— 
Total operating expenses74 98 76 99 
Operating income (loss)(21)(23)
Interest expense — — — — 
Other income, net
Earnings (loss) before income taxes(19)(22)
Income tax provision(1)(1)(1)— 
Net earnings (loss)%(20)%%(23)%
Revenue
 Three Months Ended September 30,Nine Months Ended September 30,
 20232022Change% Change20232022Change% Change
 (In thousands)
Self-Serve & Add-Ons$71,935 $76,737 $(4,802)(6)%$214,358 $231,074 $(16,716)(7)%
Vimeo Enterprise15,220 9,960 5,260 53 %39,691 28,856 10,835 38 %
Other19,098 21,436 (2,338)(11)%57,621 67,534